Ocean trade is one of the things in Civ III that seems inexplicable. Nuclear powered ships take years to cross the oceans, but two harbors with an explored sea route connecting them guarantee a flow of goods. I thought instant matter transportation was only in SMAC? Of course, blockading does work, but all available ports of a civ have to be covered for the measure to be the least bit effective.
Vulnerable trade routes were implemented in CTP, but their paths were highly illogical, and they were very easy to break.
The trade route implementation I would like to see in Civ III is similar to the behavior already applied to automated workers. Seaports of a trading civ should generate civilian ships appropriate to the sending civ's level of technology. These ships would have hidden nationality but be able to stack with units of the sending civ.
These "barb" ships would represent all outbound seaborn goods of a civ. The successful travel of the ships from one seaport to another would maintain the flow of goods. If one or more civilian traders are sunk or blocked, there should be a chance of a trade being interrupted. The reputation hit involved should fall on whoever attacks the civilian ship.
How would a trade be initiated in the first place? I have no definite opinion.
Obviously, this is a big break from the current system, but I think it could reasonably be constructed using the game elements already implemented in the original (hidden nationality, ocean pathing, randomly appearing units).
This concept has been used long enough to have a name: trip generation. It was used to calculate transportation times among all civilian buildings in SimCity 2000, so the algorithm can be very efficient.
Since trading ships would randomly pop out of seaports, the sea surrounding them would become the contested area during trade wars, as happened historically. Much more intuitive than a little red line.